G.R. No. 243278 - Social Security System vs. Commission on Audit

Pursuant to SSS Board Resolution No. 185 dated March 9, 2010, the Social Security System (SSS) proposed a Personal Services (PS) allocation of P5,384,737,000.00 in its 2010 Corporate Operating Budget (COB).
The Department of Budget and Management (DBM) approved the COB on April 12, 2011, with modifications that reduced the PS amount to P4,934,200,000.00 and expressly clarified that its approval did not authorize individual items of expenditure not in accordance with the Salary Standardization Law (SSL).
The DBM’s stipulation further required that any allowances outside the scope of the SSL be subject to the approval of the President upon the recommendation of the DBM, citing several legal instruments including portions of P.D. 1597, Memorandum Order No. 20, s. 2001, Joint Resolution No. 4, s. 2009, and Executive Order No. 7, s. 2010.

Despite the DBM’s conditions, the SSS disbursed benefits and allowances amounting to P554,109,362.03 for the Calendar Year 2010.
An audit revealed that P335,594,362.03 of these payments exceeded the DBM-approved budget and were disbursed under various headings such as Special Counsel Allowance, Overtime Pay, and Incentive Awards, with specific disallowances including:

Special Counsel Allowance: Entire amount of P6,784,050.00 disallowed.
Overtime Pay: Entire amount of P20,244,099.73 disallowed.
Incentive Awards and other benefits: Noted disallowances culminating in a total excess amount.

In connection with the audit, Notice of Disallowance (ND) No. 2012-07 was issued—targeting the SSS National Capital Region (NCR) branches—for the sum of P71,612,873.00.
The ND held that various SSS officials, from Social Security Commissioners to approving and certifying officers and even the payees, were liable to return the disallowed amounts.
The SSS filed an appeal with the COA Corporate Government Sector Cluster 2 (COA CGS-2), which denied the appeal via Decision No. 2013-007, reaffirming that even though SSS is exempt from the SSL, it remains subject to the President’s oversight through the DBM for allowances and benefits outside the law’s parameters.
A subsequent petition for review was filed before the COA Commission Proper (COA-CP). Initially dismissed for being filed out of time, a motion for reconsideration was granted “in the interests of justice and substantial rights.”
Ultimately, COA-CP issued Decision No. 2018-379, affirming the COA CGS-2 ruling with modifications that excused passive recipients (those who received the benefits in good faith) from returning the disallowed amounts.

The SSS petition challenged the COA-CP’s decision on the ground that it constituted a grave abuse of discretion by holding the approving and certifying officers liable.
The relief prayed for included:

Reversal and annulment of COA-CP Decision No. 2018-379.
Annulment of Notice of Disallowance No. 2012-07.
Declaration that the payment of Special Counsel Allowance, Overtime Pay, and Incentive Awards as recorded in the audit was valid.

Whether the COA-CP acted with grave abuse of discretion in affirming the COA CGS-2 decision, thereby holding the SSS approving and certifying officers liable for the disallowed amounts.
Whether the SSS, based on its charter which grants it the power to fix reasonable compensation, allowances, and benefits for its personnel, is exempt from the requirement of obtaining Presidential (or DBM) approval for such disbursements.
Whether the disallows made for the excess allowances and benefits were proper in view of the existing laws and administrative guidelines regulating compensation in Government Owned or Controlled Corporations (GOCCs).